As partners from top tech investment firm Tiger Global Management attended recent board meetings, they kept hearing about a small startup out of Seattle that was helping executives hire engineers.
The company is Karat, a Seattle startup that has quietly spent the past few years conducting thousands of first-round technical interviews for customers such as Pinterest, Compass, Indeed, and others.
Tiger Global spotted a trend, and now the firm is pouncing. It’s leading a fresh $28 million investment round in Karat, which also reeled in cash from Norwest Venture Partners and 8VC as part of the Series B round announced Wednesday.
Tiger Global has backed giant hiring-related companies such as LinkedIn and Workday, so its bet on Karat is worth noting.
“We believe the company helps their customers identify great engineering candidates more efficiently,” Scott Shleifer, partner at Tiger Global, said in a statement.
Hiring engineers is a crucial task for any tech company and there are a flurry of HR tools to help. But Karat has separated itself with its community of “Interview Engineers” who use Karat’s software to screen technical candidates.
Clients come to Karat with potential employees they’ve pre-selected for an open position. The startup then uses a network of vetted interviewers who conduct the interviews via video conference, using a question format and scoring rubric based on research and analysis done by Karat. The companies receive feedback on the top qualified applicants, based on Karat’s diligence.
Karat has tripled the number of interviews conducted on its platform in 2018 and will triple that metric again this year. Some of its 60 or so clients are doing 10,000 interviews annually with Karat and see an average 60 percent reduction in time spent interviewing.
“The round represents conviction that this is working,” said Karat co-founder Mo Bhende. “We want to add fuel to the fire to scale up.”
Bhende, a former director for Xbox at Microsoft, launched Karat with fellow founder Jeff Spector, who previously was chief of staff to Melinda Gates at the Bill & Melinda Gates Foundation.
They both saw holes with the interview process in their previous jobs. Engineers were spending hundreds of hours vetting potential employees instead of coding. Companies didn’t have data-driven tools to address inconsistent hiring techniques, and as a result had trouble meeting hiring goals.
Compounding the problem was increasing demand for software engineers — employment for the job is expected to grow by 24 percent from 2016 to 2026, according to the Bureau of Labor Statistics.
Karat said it has created “interview engineering at scale.” Its mission is two-fold: to help give more applicants a chance to interview for open roles, and to provide companies with data-driven insights about their hiring process, including eliminating bias and offering a more equitable interview. Only 10 percent of candidates that apply to a given role actually get a chance to interview, according to Karat.
“The interview is a critical moment in time — it’s a gateway between talent and opportunity,” Bhende said. “Traditional interviews are about screening candidates out. That’s not what we want to do and that’s not the future of hiring. We’re here to screen-in candidates.”
Bhende said Karat could expand beyond engineering-related interviews but is focused on that vertical for now. The company earns revenue via annual subscription fees.
The investment round will be used to grow its contracted interviewers and bolster the company’s R&D arm. Karat has more than 50 full-time employees and plans to double headcount this year. Total funding to date is $41 million.
This marks another Tiger Global investment in the Seattle region. The firm just co-led a $43 million round for warehousing startup Flexe last week and led a $50 million round for salon software Zenoti earlier this month. It is also an investor in Seattle marketing startup Amperity; publicly-traded real estate giant Redfin; and Bellevue, Wash.-based OfferUp, a Craigslist competitor valued at more than $1 billion. The “prolific” firm raised a $3.8 billion fund this past October.